Letter Blocks
Have blocks with letters on them and they can start building words! They don't have to be real words, but they will start to understand the concept of making words and they will start to identify each letter as they are building their words. They can build their words in a tower, or in a line, any way they want, and they are making words and associating letters as they go along.
Foam Letters
Foam letters can do the same for children and letter block. However, foam blocks you can get that come along with puzzles. When you take the letters out of the puzzle, the child can put the pieces back together where they belong. This will get them used to what they letters looks like.